Company Setup

Setting up your own company

Once the planning is complete there are a number of things you will have to do in order to get your company up and running. Some of these are legal requirements, the rest are optional, but are strongly advised.

Choose a name

There are some restrictions that may affect your choice of company name. It is important to check with Companies House that your choice of company name is both available and acceptable. Restrictions that apply are:

You cannot choose the same name as another company

The use of certain words is restricted

Names likely to cause offence are not allowed.

Names, similar to another company already registered, may also cause problems.

An objection could be made within 12 months of the launch of your company - if this happens you may be directed to change your company name.

Patent your brand & Logo

Branding is very important, especially to a new company that is about to spend time and money establishing it. For these reasons alone it is a good idea to protect your brand. One way to do this is to trademark a sign, word, shape or graphic device, which will come to represent your company.

It is not strictly necessary to register a trademark. Over time, an unregistered mark can come to symbolize the reputation and goodwill generated by your business. The right to use the mark is protected by the common law of passing-off.

It is wise to consider registering it, however, since protecting your rights is less onerous and expensive if you have obtained a statutory monopoly on the mark. Once registered, a mark is protected for ten years, after which you can renew it.

There are some restrictions on what can be registered as a trade mark, however, so here are a few tips:

A trade mark must be distinctive

It must not have become customary within the practices of your particular trade

It must not conflict with another mark, although it is possible for two similar marks to exist in different fields

You cannot use Royal arms, the Union Jack or flags from the countries that make up the UK or anything contrary to public policy or likely to deceive.

Draw up a partnership agreement (if relevant)

There are many reasons you may want to start a business with one or more partners. They may bring to the company financial investment, skills or knowledge vital to the business. However amicable your relationship with your future business partners may be, it is important to draw up a partnership agreement when you first form your company to avoid any fallout later on.

A partnership agreement should cover the following points and state what will happen when each point arises:

·        Term  

·        Capital 

·        Profit and Loss 

·        Salaries and drawings 

·        Interest 

·        Management duties and restrictions 

·        Banking 

·        Books 

·        Voluntary termination 

·        Death 

·        Arbitration

Set up a business bank account

A business bank account differs from a personal account with regard to interest rates and fees. But it is also important to set up a business account because your bank can be a great place to turn for specific expert advice and support.

Everyone's banking needs are different and the same goes for individual companies. Choosing the right bank for your business should take into account your specific requirements.

You should consider the following:

·        Do they have a package aimed specifically at start-ups?  

·        Do they offer online banking?  

·        What special offers do they have for new companies?  

·        What are terms of their loan/overdraft facilities?  

·        Where is your nearest branch?  

·        Does your nearest branch have a small business adviser? 

·        Will the bank assign someone to handle your account personally? 

·        What are the requirements/terms for company credit cards? 

·        Do they offer additional advice/support for small businesses?  

·        Insurance

With all the other expenses involved in setting up a business, it's tempting to just go for the bare minimum insurance required by law - insurance against risks to third parties.

However, when you are investing your money - and your life - into a new venture, it makes sense to get adequate insurance to avoid the risk of losing it all before you get started.

Business insurance is usually divided into three areas:

·        Business assets and equipment (contents cover) 

·        Property and buildings  

·        Liabilities

Shopping around is usually the best way to guarantee the lowest price, but for those who prefer to simplify the whole process, many companies now offer a one stop shop for your business insurance.

Register as a limited company

One of the most complicated and off-putting part of the process of starting a new business is registering your company, which involves many complicated rules and regulations as well as seemingly endless documents to fill in. It is perfectly legal to trade without registering your company - but you will be personally liable for all debts if it goes wrong. There are also tax advantages to acquiring a limited status.

Memorandum of Association

A memorandum of association is a document that sets out the company's name, where the registered office is situated (in England, Wales or Scotland) and what the company will do (also known as its objects). A company's object may simply be to carry on business as a general commercial company. Other information to be included in this document depends on the type of company, however, The Companies (Tables A to F) Regulations 1985 provides the form of memorandum for each type of company and can be purchased from HMSO bookshops or individual forms can be purchased online

An Article of Association

An Article of Association is a document which sets out the rules for the running of the company's internal affairs. Model articles are also provided in the tables mentioned above. A company can adopt these tables in their entirety, or in part.

Director, secretary and address

A private company must have at least one director and one secretary

Unlike a public company, a private company needn't appoint a formally qualified secretary

Companies House must be notified immediately if a director or secretary is newly appointed, resigns or changes their name or address or any other details provided on Form 10

You cannot be a company director if you are an undercharged bankrupt or disqualified by a court from holding a directorship (unless given leave to act in respect of a particular company or companies)

There is no minimum age limit for a director to be appointed in England and Wales (he or she must be able to consent to their own appointment). In Scotland, however, children under the age of 16 years old will not be registered as a company director.

The same person can be both a director and company secretary, provided there is at least one other director.

A sole director cannot also be the company secretary

Registered Office

The registered office will be the address to which Companies House will send letters and reminders, so it is important that this is an effective address where the post will be dealt with promptly

Companies House uses the Post Office address file to verify addresses. To avoid delay make sure you always give the correct postcode on registration forms

Other requirements

All of the above should be completed before you start trading. However, there may be more documents you need to complete or acquire, which will depend on your type of business.

It is recommended that you consult a solicitor or a relevant trade association to ensure that you meet any industry specific legal requirements.

It is also a good idea to think about the type of work you will be doing and consider whether there are any contracts or agreements that would either enhance or guarantee your service to customers. Below is a list of forms for you to consider:

·        Supplier contract 

·        Letter of intent 

·        Non-disclosure agreement  

·        Customer data protection policy 

·        Expenses records  

·        Purchase receipts 

·        Warranties/guarantees on equipment 

·        Terms and conditions of use  

·        Employment contracts